1 E9QMREPC 1 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 3 NML CAPITAL, LTD., et al., 4 Plaintiffs, 5 v. 08 CV 6978 (TPG) 6 THE REPUBLIC OF ARGENTINA, 7 Defendant. 8 ------------------------------x 9 New York, N.Y. September 26, 2014 10 3:05 p.m. 11 Before: 12 HON. THOMAS P. GRIESA, 13 District Judge 14 A P P E A R A N C E S 15 GIBSON DUNN & CRUTCHER Attorneys for Plaintiff NML Capital, Ltd. 16 BY: THEODORE B. OLSON JASON J. MENDRO 17 DECHERT LLP 18 Attorneys for Plaintiff NML Capital, Ltd. BY: ROBERT A. COHEN 19 FRIEDMAN KAPLAN SEILER & ADELMAN LLP 20 Attorneys for Interested Parties Aurelius Capital Partners and Blue Angel 21 BY: EDWARD A. FRIEDMAN 22 CLEARY GOTTLIEB STEEN & HAMILTON Attorneys for Defendant 23 BY: CARMINE BOCCUZZI 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

2 E9QMREPC 1 APPEARANCES (Cont'd) 2 DAVIS POLK & WARDWELL LLP Attorneys for Citibank 3 BY: KAREN E. WAGNER MATTHEW ROLAND 4 LINDSEY KNAPP JAMES KERR 5 MORGAN LEWIS & BOCKIUS 6 Attorneys for Clear Stream BY: JOHN M. VASSOS 7 LEVI LUBARSKY & FEIGENBAUM 8 Attorneys for JP Morgan Chase BY: HOWARD B. LEVI 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

3 E9QMREPC 1 THE COURT: This will be at 3:00 Monday. This is the 2 first of two hearings. The hearing today will deal with issues 3 about Citibank and Buenos Aires. The hearing Monday will deal 4 with recent conduct by the Republic of Argentina. The hearing 5 today is brought on by a motion which was served on Monday, an 6 order to show cause was signed. 7 Ms. Wagner, would you like to speak to that motion? 8 MS. WAGNER: I would. Thank you, your Honor. 9 Good afternoon, your Honor. 10 First, we thank the Court for hearing us on an 11 expedited basis. As you know, your Honor, Citibank sought an 12 expedited hearing because it faced serious risk if it could not 13 make the September 30 payment on the Argentine law bonds that 14 it holds for its customers. Plaintiffs have now agreed to 15 consent to that payment. 16 So you may ask, why is it that we are having this 17 hearing today. And with your Honor's permission, I would like 18 to go through a little bit of the history which I think will 19 explain to you why we are -- 20 THE COURT: The reason we are having the hearing is, 21 we are not just dealing with the September 30 payment. The 22 question is, is there any problem about Citibank servicing that 23 debt on an ongoing basis. If there was some consent to a 24 September 30 payment, that did not solve the problem. Let's 25 pass that. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

4 E9QMREPC 1 MS. WAGNER: Yes, your Honor. 2 And to go to the point, what is the issue relating to 3 Citibank and the Argentine law bonds, just to go through a 4 little of the history, when this motion first came on before 5 your Honor, after the Supreme Court issued a denial of 6 certiorari, the first thing that your Honor did when Citibank 7 brought this motion was to ask the plaintiffs if they would 8 consent to the motion. Obviously, from the very beginning your 9 Honor has understood that Citibank is in a very different 10 position from Bank of New York Mellon, an indenture trustee, 11 and the Argentine law bonds are extremely different from the 12 bonds that are New York law bonds that are governed by an 13 indenture as to which Bank of New York is the indenture 14 trustee. 15 Your Honor has continued to express himself repeatedly 16 that the bonds are very different and that Citibank is very 17 different. Your Honor has said repeatedly, most recently on 18 September 10, as to the bonds that when you were dealing with 19 the injunction, what you have referred to as the major 20 injunction in this case, what I thought I was dealing with was 21 something that was quite different from the bonds dealt with in 22 the large injunction, which are payable in New York, subject to 23 New York law. 24 It's my understanding that what is being dealt with in 25 Argentina are bonds issued in Argentina, specifically subject SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

5 E9QMREPC 1 to Argentine law. As to Citibank the Court has observed Bank 2 of New York has a completely different relationship to the case 3 versus the Citibank branch in Buenos Aires. Citibank Argentina 4 has to deal with the Republic of Argentina, and most recently 5 you directed the parties. 6 It was my view and still is my view that the Argentine 7 law bonds, issued in Argentina, payable in Argentina, subject 8 to Argentine law, are different from the bonds subject to the 9 February 23 order. And the parties should know that whatever 10 issues there are about Citibank and Argentina, September 30 or 11 December 31, it is the view of the Court that what we are 12 dealing with and what your applications relate to are bonds 13 that are different from the bonds covered by the February 23 14 order. 15 Your Honor, if you go back and look at the motion 16 which was brought by plaintiffs with respect to the February 23 17 order, you will find that that motion was directed very 18 specifically to two series of bonds for which Bank of New York 19 was indenture trustee. You were provided with evidence about 20 those bonds. You were provided no evidence whatsoever about 21 Citibank or about the Argentine law bonds or anything other 22 than the Bank of New York bonds. For that reason, during those 23 hearings you did not consider the difference between Bank of 24 New York Mellon and Citibank or the difference between the Bank 25 of New York bonds and the Citibank bonds. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

6 E9QMREPC 1 However, your Honor, as you know, you wrote an opinion 2 in connection with the injunction, the major injunction that 3 was issued at that point, and it was very clear from the 4 opinion that what you were dealing with were the parties that 5 were involved somehow in the contract relating to the Bank of 6 New York bonds. Your Honor's injunction was intended to 7 enforce a contractual obligation. That contractual obligation 8 was based on the fiscal agency agreement which defines external 9 debt and which says that external indebtedness is subject to 10 the pari passu clause. There was not a big discussion in that 11 hearing about whether the Bank of New York bonds were subject 12 to the clause. 13 THE COURT: Let me interrupt you. We have had many 14 sessions on various things in this case and the lawyers have 15 made statements and I've made statements. But we are now at a 16 different stage. We are dealing with the question of 17 Citibank's ongoing right or lack of right to service the 18 Argentine bonds. Now, if we could get to the issues, the legal 19 issues on that and not go back -- 20 MS. WAGNER: Certainly, your Honor. 21 THE COURT: And recap a whole lot of things in the 22 past. There are legal issues on that point. I am sure you're 23 ready to address them. 24 MS. WAGNER: Yes, your Honor. 25 There are many legal issues. There are some legal SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

7 E9QMREPC 1 issues relating to the Argentine law bonds. There are some 2 issues relating to Citibank Argentina. The issues relating to 3 Citibank Argentina is that it is a separate entity. It is 4 located in Buenos Aires. It is a branch bank licensed by 5 Argentina. It is subject to the laws of Argentina. And as a 6 matter of comity it is not appropriate for a U.S. court to 7 issue an order that requires a branch bank in Argentina to 8 violate the law. Applying the injunction of this Court to 9 payments to customers by Citibank Argentina would require that 10 Citibank Argentina violate the law of the country in which it 11 is licensed and would put Citibank Argentina and its employees 12 at great risk. And we have put in evidence before the Court 13 that is undisputed as to these points. 14 So as to Citibank Argentina, the law is that a comity 15 analysis which is now required by the new Gucci case in the 16 Second Circuit would lead you to the conclusion that you can't 17 require those entities to violate Argentine law. 18 I would also make one other point as to Citibank 19 Argentina which does relate to the original injunction, and 20 that is the original injunction was issued to enforce a 21 contract. And the parties who were enjoined did play some role 22 in that contract, which would be the indenture and fiscal 23 agency agreement. 24 Citibank is not a party to either one of those 25 contracts. It plays no role in either one of those contracts. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

8 E9QMREPC 1 It is a custodian. It is paid by its customers. It has no 2 contractual relationship with Argentina. It has no contractual 3 relationship under the indenture. It simply holds bonds for 4 customers. And, therefore, it is outside the bounds of the 5 contract which was being enforced in the original injunction. 6 As to Citibank Argentina I would suggest to you, those 7 are two key points. And the other key points that flow from it 8 are also issues of comity, are that Argentina makes payments on 9 the bonds, the Argentine law bonds entirely within Argentina. 10 Payment is made, as a matter of law, by Argentina when payment 11 is made to the CYRL, which is a government entity in Argentina, 12 and then it's passed on to the Caja de Valores, which is 13 another local Argentine entity, neither of which is in any way 14 present in New York. 15 Payment is complete by the time the payment reaches 16 these entities. When Citibank gets the payment, the money 17 belongs to customers. Under Argentine law Citibank has no 18 choice but to pass it on to customers. And if Citibank doesn't 19 pass it on to customers, Citibank will be subject to another 20 doctrine, which is foreign sovereign compulsion. 21 Argentina has made it very clear that it will enforce 22 its banking laws against Argentina. It has suggested that it 23 could take quite serious enforcement action, but there is no 24 question that Argentina, as a sovereign, is entitled to enforce 25 its banking law with respect to a bank licensed in Argentina. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

9 E9QMREPC 1 So foreign sovereign compulsion would also be a doctrine that 2 would be relevant to this analysis, and obviously the questions 3 of separate entity, of active state, and sovereign foreign 4 compulsion were not issues that were addressed by anyone in 5 connection with the original injunction because there was 6 nobody in that capacity. Indeed, there was nobody in any 7 custodian capacity. It was rather people involved in the 8 contract for paying the bonds. 9 Then with respect to the Argentine law bonds, your 10 Honor, they are different from the bonds that were addressed in 11 the hearing, the Bank of New York bonds. The bonds are local 12 law bonds. They are governed by Argentine law. Some of them 13 are peso bonds. Some of them are dollar bonds. But they are 14 all local bonds. Some of them were issued in exchanges that 15 took place at the same time as the international exchanges. We 16 know now that many of them were not issued in exchanges. Most 17 of them were not. Most of them were issued independently of 18 any exchange. Those that were issued in the exchanges were 19 exchanged for other domestic debt. There was no exchange of 20 something that was external indebtedness for an Argentine law 21 bond, and there was no Argentine law bond exchange for 22 something that is external indebtedness. 23 Because these bonds, therefore, are not external 24 indebtedness -- they are called domestic foreign currency 25 indebtedness -- they are not subject to the pari passu clause, SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

10 E9QMREPC 1 which the injunction was intended to enforce. They have no 2 indenture trustee. They were issued pursuant to local laws, 3 local government decrees. The government of Argentina did not 4 submit to jurisdiction in the United States -- 5 THE COURT: Can I interrupt you. Maybe you are going 6 to come back to this. You went over very quickly the issue 7 about whether these bonds are subject to the pari passu 8 provision of the 1994 instrument. 9 MS. WAGNER: Yes, your Honor. 10 THE COURT: Are they or are they not? 11 MS. WAGNER: Your Honor, they are not subject to. 12 THE COURT: Why not? 13 MS. WAGNER: They are not because they constitute what 14 is called domestic foreign currency indebtedness. The fiscal 15 agency agreement is the agreement that governs the pari passu 16 obligation. Pursuant to the fiscal agency agreement, external 17 indebtedness is the debt that is subject to the pari passu 18 obligation. External indebtedness is defined to exclude 19 domestic foreign currency indebtedness. 20 So then the question is, what is domestic foreign 21 currency indebtedness? And we have put before you a number of 22 papers that will demonstrate domestic foreign currency 23 indebtedness is either one of several bonds that are identified 24 by name, or it is a bond that was issued in exchange for such a 25 bond, or it is another kind of bond, whether it is Argentine SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

11 E9QMREPC 1 peso denominated or dollar denominated or some other currency 2 denominated, but issued only in Argentina. 3 THE COURT: You are going a little quickly for me. Go 4 back and I want to ask, again, why are these bonds subject to 5 the 1994 fiscal agency agreement and the pari passu? Just 6 explain that again. 7 MS. WAGNER: Sure, your Honor. 8 The pari passu clause is contained in the fiscal 9 agency agreement. 10 THE COURT: Of 1994? 11 MS. WAGNER: Of 1994. And it imposes the obligation, 12 and I'm just going to read it to you, your Honor. The payment 13 obligations of the Republic under the securities shall at all 14 times rank at least equally with all its other present and 15 future unsecured and unsubordinated external indebtedness, as 16 defined in this agreement. 17 So I just read a quote from the fiscal agency 18 agreement. The fiscal agency agreement then defines external 19 indebtedness to mean obligations of the Republic denominated in 20 a currency other than the lawful currency of the Republic, 21 provided, however, and this is the key proviso, that no 22 domestic foreign currency indebtedness shall constitute 23 external indebtedness. So domestic foreign currency 24 indebtedness is excluded from the indebtedness that is subject 25 to the pari passu clause. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

12 E9QMREPC 1 So far is that clear, your Honor? Shall I continue? 2 THE COURT: I'd like that language. 3 MS. WAGNER: It's paragraph 1C of the fiscal agency 4 agreement. 5 THE COURT: The language I see, I don't know how you 6 refer to it as the exception is. From the fiscal agency 7 agreement of 1994 offered exclusively within the Republic of 8 Argentina. Is that what you are talking about? 9 MS. WAGNER: Your Honor, I am talking about the 10 definition of domestic foreign currency indebtedness, which is 11 on page 17 of the fiscal agency agreement. And that includes a 12 series of identified categories of bonds in subparagraph little 13 i. And then it adds to that: Any indebtedness issued in 14 exchange or as a replacement for the indebtedness, referred to 15 in little i above, and three little i: Any other indebtedness 16 payable by its terms or which at the option of the holder 17 thereof may be payable in a currency other than the lawful 18 currency of the Republic of Argentina. 19 THE COURT: This is a definition of what? 20 MS. WAGNER: Domestic foreign currency indebtedness. 21 That's on page 17 of the FAA. 22 THE COURT: Just a minute. 23 I thought I was quoting from that, but maybe you are 24 quoting from a different part of it. Where are you referring 25 to? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

13 E9QMREPC 1 MS. WAGNER: Your Honor, if you look towards the 2 middle of it where there is two little i -- first of all, there 3 are a series of categories of bonds. Then two little i says: 4 Anything issued in exchange for those bonds. Three little i: 5 Any other indebtedness, which is offered exclusively within the 6 Republic of Argentina or issued in exchange for indebtedness 7 payable to the lawful currency in the Republic of Argentina. 8 There are a number of different types of bonds. 9 THE COURT: Just a minute. 10 MS. WAGNER: It's a very dense paragraph. 11 THE COURT: I just want to make sure we are focusing 12 on the same language. I'm focusing on that same long paragraph 13 headed domestic foreign currency indebtedness, and I'm talking 14 about or I was referring -- I meant to refer to a provision way 15 down in that paragraph, little ii, and then subparagraph: 16 Offered exclusively within the Republic of Argentina. 17 Are we talking about the same language? 18 MS. WAGNER: We are talking about the same language, 19 your Honor, except I think it's possible that you are limiting 20 your focus to fewer provisions of it than I might focus on. 21 But, yes, we are talking about the same language in the same 22 provision. 23 THE COURT: You go ahead. 24 MS. WAGNER: Your Honor, I think it is clear that if a 25 bond is domestic foreign currency indebtedness, then it is not SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

14 E9QMREPC 1 external indebtedness and therefore it is not subject to the 2 pari passu clause. We have put evidence before you, your 3 Honor, and the Republic has also put evidence before you that 4 the Argentine law bonds were either obtained because they were 5 offered and exchanged for one of these other local law bonds, 6 or they were offered exclusively in Argentina. There are 7 several different categories. We have put evidence before you 8 that they fall within one of these categories. 9 THE COURT: When were these bonds issued? 10 MS. WAGNER: These bonds were issued at various times, 11 your Honor. Some of them were issued in 2005 in connection 12 with a parallel local exchange. Many of them were issued at 13 other times for other purposes. For example, as we talked 14 about several hearings ago, a lot of them were issued in 15 connection with the Repsol settlement. That was fairly 16 recently. That is one category of them. They are all issued 17 in the same series using the same ISIN numbers. 18 And while we do know how many of them were issued in 19 some form of exchange, we know that most of them were not. And 20 we know that we cannot tell the difference between ones that 21 were and ones that were not. So the Argentine law bonds, in 22 fact, have two distinct characteristics which make them not 23 subject to the injunction. One is the ones that were not 24 issued in any exchange obviously do not fall even within the 25 literal language of the injunction. But, two, domestic foreign SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

15 E9QMREPC 1 currency indebtedness is not subject to the pari passu clause 2 and, therefore, could not be subject to an injunction issued 3 for the purpose of enforcing the pari passu clause. 4 THE COURT: We have a number of people who may wish to 5 talk. Can you conclude. 6 MS. WAGNER: Certainly, your Honor. I will conclude. 7 I guess what I would conclude, finally, your Honor, is 8 this. The injunction, the major injunction was issued in this 9 case on a record that had only to do with Bank of New York 10 bonds. If plaintiffs wished to enjoin payments on the 11 Argentine law bonds, they need to make the record and they have 12 not done that. However, I would also say that even in the 13 major injunction, the limit of the injunction was on a party 14 that had some contractual connection to the bonds. So, for 15 example, in your Honor's opinion explaining the payments that 16 were intended to be enjoined, your Honor noted at page 10 of 17 that opinion that after the funds got to a depository trust 18 company in New York, the funds are then deposited into 19 financial institutions, apparently banks, which then transfer 20 the funds to their customers, who are the beneficial interest 21 holders in the bonds. Plaintiffs assert that under Rule 65(d), 22 the injunction should bind Argentina, the indenture trustee, 23 the registered holders, and the clearing system. They did not 24 ask that those financial institutions who received the money 25 from the DTC be enjoined, and they were not. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

16 E9QMREPC 1 In our situation, your Honor, on the Argentine law 2 bonds, the equivalent of DTC is the Caja de Valores, and your 3 Honor found that in a previous opinion involving Citibank 4 Argentina. We received the money from the Caja de Valores and 5 under your Honor's analysis in this injunction, no matter what 6 else is in the case, we should not be bound by the injunction. 7 Thank you, your Honor. 8 THE COURT: Who wants to speak next. 9 MR. OLSON: Theodore Olson, your Honor, on behalf of 10 NML and the other plaintiffs. 11 A couple of preliminary points. 12 Your injunction which you issued was clear and 13 warranted. It was the subject of repeated hearings and 14 repeated briefings. It's been affirmed as issued by the Second 15 Circuit twice. The Supreme Court refused to hear the case. It 16 has never been modified. 17 What we are here today about is an application by 18 Citibank to modify the injunction that has been affirmed twice 19 by the Second Circuit, which has been opened, an effort by 20 other parties for similar modifications of the injunction and 21 will open the way for Argentina to engage in similar evasions 22 of the order that you've already issued. 23 Our position is that Citibank does not have the right 24 certainly at this time to seek modification of an injunction 25 issued in a case after all that briefing, argument, and appeals SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

17 E9QMREPC 1 in a case at which it was not a party and which, if it had 2 sought to intervene, or sought to seek modifications of the 3 injunction, should have been done a long time ago, much 4 earlier, and should have been raised before. 5 THE COURT: Why is this seeking a modification of that 6 injunction? And the reason I ask is, that injunction applied 7 to certain bonds. Of course, it had other provisions. But it 8 applied to certain bonds. 9 MR. OLSON: It applied to -- 10 THE COURT: It didn't apply to all the bonds issued in 11 the world. And are these not different bonds than the ones 12 covered by that injunction? 13 MR. OLSON: These are not, respectfully, your Honor, 14 different bonds than the bonds covered by the injunction. The 15 injunction was clear. It had to do with exchange bonds. These 16 bonds, as Ms. Wagner acknowledged in the Second Circuit, were 17 exchange bonds. Two of the judges in the Second Circuit during 18 that hearing eight days ago specifically said, the injunction 19 is clear, doesn't it cover. You decided that it did cover 20 these bonds. The judges of the Second Circuit felt that it 21 did. They thought that the injunction was clear. If there is 22 going to be a change in the injunction, it's going to have to 23 be required to be modified. And the implications of that is 24 that other parties are going to come in and say, our bonds are 25 different. They were issued at different times and they are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

18 E9QMREPC 1 not subject to the injunction. You are going to have a great 2 deal of litigation. If the injunction is modified, that's 3 going to be an appealable order. It is going to frustrate any 4 possibility of settlement in this case. And it's going to have 5 to be done, your Honor, I respectfully submit, on the basis of 6 a factual record. Ms. Wagner basically said that there are 7 issues, factual issues. There need to be facts were her words, 8 with respect to the Citibank Argentina itself, the nature of 9 that institution, and my clients have sought discovery on this 10 issue and the other issues I'm about to mention. And we have 11 not had the opportunity to do that because Citibank Argentina 12 has rejected any effort to do that. That discovery would focus 13 on the nature of the entity, Citibank Argentina, the nature of 14 these bonds. You've just heard that there are all sorts of 15 bonds here, possibly issued at different times, some of which 16 may be so-called exchange bonds, some of them may not be 17 exchange bonds. We have also heard assertions by Citibank -- 18 THE COURT: Look. The bonds that are covered by the 19 injunction, it wasn't some indefinite concept. They are 20 defined. They were a particular kind of bond. And it's not 21 all possible bonds. It's a particular kind of bond that was 22 covered. 23 MR. OLSON: Precisely, your Honor. And it's covered 24 and in clear terms in the injunction that you ordered of 25 exchange bonds -- SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

19 E9QMREPC 1 THE COURT: And they were payable in New York, 2 governed by New York law. 3 MR. OLSON: That is not in the terminology of your 4 injunction, your Honor. It is not in the injunction which the 5 Second Circuit eight days ago thought was clear. 6 THE COURT: The Second Circuit did not issue any 7 opinion. 8 MR. OLSON: No. But the injunction that you issued 9 was issued after numerous hearings, numerous exchanges back and 10 forth between all of the parties. This issue was not raised 11 then and was not raised because the injunction was clear. It 12 applied to bonds that were exchange bonds and what we are 13 talking about today is carving out an exception for certain 14 types of bonds and it's not very clear and it cannot be clear 15 until there is a factual exposition of the record pursuant to 16 the discovery that we sought. 17 What Ms. Wagner has argued here is, they are not 18 subject to the pari passu clause. Your injunction was broader 19 than that. And it wasn't so limited and it was issued in 20 conjunction with a repeated history of Argentina of attempting 21 to evade their responsibilities by engaging in litigation and 22 changing the legislation and threatening to exchange the 23 bond -- 24 THE COURT: You are getting into a completely 25 different issue. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

20 E9QMREPC 1 MR. OLSON: I am pointing that out, your Honor, 2 because the injunction that you issued was issued in the 3 context of all of that. 4 THE COURT: Look. I've got to tell you that whatever 5 was written by me or the Court of Appeals, it related to the 6 bonds that were issued in 1994 by the Republic and were subject 7 to an exchange or two exchanges in '05 and 2010. But they were 8 the bonds, the bonds that were issued in 1994, and subject to 9 contractual documents pertaining to them, and they were bonds 10 that were payable in New York, subject to U.S. law. They were 11 a particular kind of bond. 12 MR. OLSON: Your Honor, that's correct. But the equal 13 payment provision and the pari passu provision that we have 14 been talking about throughout this litigation talked about 15 providing that those bonds that you just referred to would be 16 put on an equal footing with respect to payment obligations to 17 other external indebtedness issued by Argentina. 18 THE COURT: Look. We have got a very precise issue of 19 law here, which you have just really alluded to. And that is, 20 I don't know whether you meant to describe it the way I'm 21 describing it, but I hope we are in agreement on the issue. 22 There certainly is an issue and you went over this rather 23 quickly. But I've given thought to this before this moment. 24 And that is, the 1994 fiscal agency agreement does indeed have 25 a provision dealing with external indebtedness, right? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

21 E9QMREPC 1 MR. OLSON: Yes. 2 THE COURT: And one thing that it says is that any 3 external indebtedness issued by the Republic is subject to the 4 pari passu, right? 5 MR. OLSON: Yes, your Honor. 6 THE COURT: Now, the issue then is quite precise, and 7 that is, do these bonds that we are talking about, the bonds 8 issued in Argentina -- I won't try to define them, although 9 that definition I'm sure we will come back to. Are they 10 external indebtedness calling into play the pari passu clause 11 or are they not such external indebtedness. And that depends 12 on some particular wording of the 1994 fiscal agency agreement. 13 MR. OLSON: Yes, your Honor. 14 THE COURT: Ms. Wagner referred to that and she 15 referred to it, the language which defined domestic foreign 16 currency indebtedness. There is language about bonds offered 17 exclusively within the Republic of Argentina. 18 Can you deal with that language? Because that is 19 really, in my mind, what this is all about. 20 MR. OLSON: Yes, your Honor. May I make this one 21 point. And I would like Mr. Friedman to be allowed to answer 22 specific questions about this. 23 But you are precisely right, in our view, that the 24 question is, are these bonds, the Citibank Argentina bonds, 25 external indebtedness or are they carved out because they are SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

22 E9QMREPC 1 domestic foreign currency indebtedness. 2 Now, Mr. Friedman will address that, address your 3 specific questions with respect to that. But you heard 4 earlier, there is all kinds of bonds here. You would need a 5 specific factual record to make that determination. We were 6 engaged in an effort to obtain discovery so we could find out 7 about Citibank Argentina, the nature of those bonds when they 8 were issued, how they were payable, and all of those facts 9 which are necessary to make the distinction that you are being 10 asked to make here today. And it will require some change in 11 the injunction. And I think that that will open the door to 12 further efforts -- 13 THE COURT: If this language I'm talking about 14 applies, I don't think it requires any change in the injunction 15 at all. 16 MR. OLSON: Certainly we would differ with that, but 17 it certainly will require fact finding with respect to, and we 18 are entitled to conduct that discovery with respect to the 19 difference between these bonds and the other bonds. And if I 20 might yield to Mr. Friedman to specifically, because he's much 21 more familiar than I am with these particular bonds. 22 THE COURT: All right. Fine. Thank you very much. 23 MR. FRIEDMAN: Good afternoon, your Honor. Edward 24 Friedman, Friedman Kaplan Seiler & Adelman, attorneys for 25 plaintiffs, Aurelius and Blue Angel. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

23 E9QMREPC 1 I would like to start by directly addressing your 2 Honor's question about domestic foreign currency indebtedness 3 and the provision in the fiscal agency agreement that your 4 Honor was discussing with Ms. Wagner, who is counsel for 5 Citibank. 6 The U.S. dollar denominated Argentine law bonds that 7 are at issue on this motion are external indebtedness, and they 8 are not domestic foreign currency indebtedness, which is carved 9 out of external indebtedness. 10 The reason why these bonds are not domestic foreign 11 currency indebtedness is as follows: And as your Honor 12 discussed with Ms. Wagner, in the definition of DFCI, or 13 domestic foreign currency indebtedness, there are a number of 14 items explaining what constitutes DFCI. None of those items 15 result in the conclusion that these U.S. dollar denominated 16 Argentine law bonds are domestic foreign currency indebtedness. 17 And I can take the items in the definition in any order, your 18 Honor, and maybe it makes sense to start with Roman at I and 19 then conclude with Roman at III, which is one of the items that 20 your Honor was questioning Ms. Wagner about. Would that be 21 okay? 22 THE COURT: Very good. Thank you. 23 MR. FRIEDMAN: Under Roman at I, domestic foreign 24 currency indebtedness consists of certain specifically 25 identified bonds issued by the Republic of Argentina. We can SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

24 E9QMREPC 1 look at those bonds listed, but it is obvious to everyone that 2 the bonds at issue here were not even in existence at the time 3 of the fiscal agency agreement and thus are clearly not listed 4 in Roman at II. 5 Then we come to Roman at II, which says: DFCI would 6 include any indebtedness issued in exchange or as replacement 7 for the indebtedness referred to in item 1. So we have to 8 consider, your Honor, these. 9 THE COURT: I would think that little ii doesn't 10 apply. Can we just pass that. 11 MR. FRIEDMAN: Sure. And the only reason why I paused 12 on it, there has been, on this motion, an argument by Citibank 13 and by Argentina that little ii does apply. And I believe your 14 Honor is correct, it does not apply here. I'm happy to address 15 that or let them address it first, and I'll turn to item Roman 16 at III. Shall I do that, your Honor? 17 THE COURT: Please. 18 MR. FRIEDMAN: Item III says: Domestic foreign 19 currency indebtedness would be -- it's got two parts, an A and 20 a B. And the A, which is what your Honor was referring to 21 earlier, it's indebtedness offered exclusively within the 22 Republic of Argentina. That's what I would like to talk about. 23 Everybody agrees that item B does not apply here, because these 24 are dollar denominated bonds, not peso bonds. 25 THE COURT: You're focusing on the critical language. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

25 E9QMREPC 1 MR. FRIEDMAN: Yes. Are these U.S. denominated 2 Argentine law bonds, were they offered exclusively within the 3 Republic of Argentina. And the answer, your Honor, is, the 4 record shows, these bonds were not offered exclusively in the 5 Republic of Argentina. They were offered pursuant to the same 6 prospectus that offered the New York law, the UK law, and also 7 the Argentine law exchange bonds. The prospectus is part of 8 the record. The prospectus was issued through the SEC in the 9 United States. The bonds were not offered exclusively in 10 Argentina. They were offered pursuant to the same prospectus 11 that in 2005 and 2010 -- 12 THE COURT: I would not think that the prospectus 13 governs. I would think it's a matter of fact where these bonds 14 were offered. And, obviously, the factual issue has to be 15 dealt with. But I don't think the prospectus answers the 16 question. 17 MR. FRIEDMAN: As a matter of fact, your Honor, the 18 persons who received the U.S. dollar denominated Argentine law 19 bonds were not located exclusively in Argentina and the bonds 20 were not offered exclusively in Argentina. The eligible bonds 21 for the exchange which resulted in the issuance of these 22 Argentine law bonds, the eligible bonds could be held, were 23 held through accounts at clearing agencies such as Euroclear 24 and Clearstraight. When the holders of bonds participated in 25 the exchange in 2005 and 2010 and received Argentine law dollar SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

26 E9QMREPC 1 denominated bonds, those exchanges took place outside of 2 Argentina. 3 THE COURT: I'm really not referring to those 4 exchanges because they were exchanges for a different bond. 5 They were exchanges for the 1994 bond. Let's not get that 6 confused. 7 MR. FRIEDMAN: If I may, your Honor, the exchanges 8 were not exclusively for the 1994 bonds. When we look at what 9 your Honor refers to as exchange bonds, the exchanges were 10 offered for -- 11 THE COURT: I don't use the term exchange bonds. 12 MR. FRIEDMAN: Your Honor, if I may just step back for 13 a moment, I think it would be very helpful just some put in 14 front of the Court the language from the injunction, the 15 amended February 23 order. What that order says is that the 16 injunction and the equal treatment obligation applies to 17 exchange bonds and, your Honor, in that injunction defines 18 exchange bonds as bonds issued in the 2005 or 2010 exchange. 19 That language -- 20 THE COURT: Let me just interrupt you. 21 It is not going to help to get confused, and to 22 prevent confusion let us keep in mind, and I ask you to keep in 23 mind -- and I was the author of the injunction. I have a 24 pretty good idea of what it meant. And that is, we were 25 dealing with the 1994 bonds issued by the Republic, subject to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

27 E9QMREPC 1 New York law, payable in New York. That's what we were dealing 2 with. 3 Now, when I was dealing with the exchanges that 4 occurred in 2005 and 2010, I was clearly dealing, as far as I 5 was concerned, as the judge, with exchanges for the 1994 bonds. 6 And let us keep that in mind and not stray from it. 7 MR. FRIEDMAN: May I say, your Honor, that I'm 8 obviously not in a position to address what your Honor had in 9 mind at the time of the issuance of the pari passu injunction, 10 but what I would like to say is that there has been extensive 11 litigation both in the Second Circuit Court of Appeals and in 12 this court, your Honor, concerning the proper interpretation of 13 the words in that injunction. And I would -- 14 THE COURT: What litigation are you talking about? 15 MR. FRIEDMAN: I'm referring to the original two 16 appeals to the Second Circuit, when your Honor issued the 17 injunction back in 2012. I'm referring to the ruling by your 18 Honor on July 28 of this year explaining and clarifying the 19 injunction. And then I'm referring to the transcript of the 20 argument before the Second Circuit last week where there was 21 extensive discussion both by counsel that was significant and 22 by the judges on the Second Circuit concerning the words of the 23 injunction and the proper interpretation of those words. And 24 if your Honor would -- 25 THE COURT: What was the issue of interpretation? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

28 E9QMREPC 1 MR. FRIEDMAN: The issue I'm referring to, your Honor, 2 I would center on your Honor's order just July 28, 2014, less 3 than two months ago, in this case and it's an order that 4 Ms. Wagner did not mention when she was reciting what your 5 Honor has said about the pari passu injunction. In that July 6 28 order, after having heard extensive argument from counsel, 7 your Honor ruled that the U.S. dollar denominated exchange 8 bonds issued under Argentine law are exchange bonds covered by 9 the pari passu injunction. And your Honor may recall that -- 10 THE COURT: When did I issue any such ruling? 11 MR. FRIEDMAN: If I may, your Honor, may I grab my 12 binder with that ruling. Because I think it's important, just 13 to be clear, about what is in the record already. This was 14 July 28, 2014. I'm sure your Honor will recall that the 15 conclusion of that order by your Honor was, and I'll just read 16 this short paragraph into the record: However, the Court will 17 only allow this one-time payment on the dollar-denominated 18 exchange bonds after July 30, 2014. The Court will rescind the 19 Citibank order with regard to the dollar-denominated exchange 20 bonds. And then your Honor went on to say: To avoid future 21 confusion, the parties are directed to devise a way to 22 distinguish between the Repsol bonds and the exchange bonds 23 before the next interest payment is due. And I'd like to say a 24 word further about that order, if I may, your Honor. 25 THE COURT: Go ahead, please. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

29 E9QMREPC 1 MR. FRIEDMAN: The issue before the Court at the time 2 of that order was whether the U.S. dollar denominated Argentine 3 law bonds were exchange bonds within the meaning of the 4 injunction. And your Honor specifically ruled, and this came 5 up during the argument a few days before, it's reflected in 6 this order. Your Honor ruled that these Argentine law dollar 7 denominated bonds are exchange bonds within the meaning of the 8 injunction. 9 The confusion that arose that is addressed at the end 10 of the paragraph I read is that counsel for Argentina and for 11 Citibank, after the argument on the motion for reconsideration, 12 after the argument, after the briefing, for the first time said 13 to the Court, you know, for some of the Argentine law exchange 14 bonds, there is some confusion because there are bonds that 15 were issued to Repsol with the same ISIN number. And as your 16 Honor knows, an ISIN number is a specific identifying 17 characteristic for a bond. 18 So the situation that your Honor was addressing was, 19 one, the Court ruled that these Argentine law dollar 20 denominated exchange bonds are exchange bonds. But there was 21 an issue that the Court felt should be addressed because when 22 you look at these exchange bonds, there are some other bonds 23 out there trading that were actually not issued in the 24 exchange. 25 THE COURT: Let me interrupt you. Can I have the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

30 E9QMREPC 1 February 23 injunction. 2 The February 23, 2012 order, as it's called, or it was 3 amended, was dealing with the 1994 bonds and the exchanges of 4 2005 and 2012 dealing with those bonds. 5 Now, what the February 23, 2012 order meant was that 6 if the Republic sought to make a payment presumably of 7 interest, but sought to make a payment on the bonds that were 8 issued on those exchanges, then there had to be a payment under 9 the pari passu clause. 10 But the record should be crystal clear that the Court 11 was dealing with the 1994 bonds and bonds issued in exchange 12 for the majority of those 1994 bonds. 13 Now, the record supports what I've said. I am the 14 judge on it and that is what I intended and the record supports 15 that. 16 And what is called the injunction was the injunction 17 saying that there could be no payment on those bonds unless 18 there was a recognition of the pari passu for the people who 19 didn't exchange, who had their judgments. 20 Now, no action was taken by the Court. Let me start 21 again. After that injunction was issued, there were certain 22 actions taken by the Republic which required some remedy by me 23 and they are really not relevant to what we are talking about 24 now. The Republic attempted to make a payment of $500 million, 25 maybe more, and the Court held that that payment could not be SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

31 E9QMREPC 1 made because it did not deal with the pari passu situation. 2 And so I think about $500 million was paid into the Bank of New 3 York and may still be there. But, anyway, the Bank of New York 4 acted very responsibly and did not pass that on to bondholders. 5 What I'm getting at is this. When summer came, Karen 6 Wagner, on behalf of Citibank, made an application to the Court 7 or request to the Court for clarification, or whatever you want 8 to call it, about the question of whether Citibank and 9 Argentina would be violating an injunction if they made a July 10 30, 31, whatever it was, interest payment. At that juncture 11 there was not the kind of full briefing and argument that we 12 are now having. The idea was to either clear or not clear an 13 interest payment down in Argentina due at the end of July. 14 Ultimately, the Court said okay to that payment, but made it a 15 one-time thing, the idea being, obviously, the Court knew, 16 everybody knew there would be interest payments due September 17 30 and December 31, et cetera. We didn't attempt to cover all 18 of that. 19 Now, what I hope these fine professional lawyers will 20 understand, and I'm sure you do understand, is that we are now 21 engaged in something far different from what went on in June 22 and July. We are now considering at a depth which was not gone 23 into in July, we are considering the question of whether 24 certain types of bonds issued in Argentina are subject or are 25 not subject to the 1994 fiscal agency agreement and the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

32 E9QMREPC 1 requirement of pari passu treatment. And I have to say that it 2 is not really helpful to me and it is not helpful to the case 3 to make all these issues depend on the issue of a particular 4 term in a July 28 order. 5 You focused very heavily on the phrase exchange bonds. 6 It's used a couple of times in the July 28 order. I have to 7 tell you that as the judge in the case, I am not willing to let 8 the whole case depend on the use of that term twice in the July 9 28 order. The issues are bigger, deeper than that. So if you 10 want to rely on that, please don't. 11 MR. FRIEDMAN: I do have more things I'd like to say 12 about the prior orders of this Court, not just the July 28 13 order, but, first, if I may, I would like to offer a practical 14 suggestion. 15 Plaintiffs believe that the issues before the Court 16 today are extremely important, and we appreciate that your 17 Honor is wrestling with those issues. The reason why 18 plaintiffs have proposed a stay as set forth in our proposed 19 order, so as to allow Citibank to process this September 30 20 payment, is so that the parties and your Honor will not have to 21 deal with these important issues on an emergency basis. Your 22 Honor has heard extensive argument about both technical issues 23 and what is DFCI and factual assertions relating to that. Your 24 Honor has heard legal argument, and there is more to come, 25 about the orders entered by your Honor, as well as statements SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

33 E9QMREPC 1 by counsel before your Honor and before the Second Circuit, 2 statements by the Second Circuit, and I know your Honor will 3 want to give full consideration to these matters because -- 4 THE COURT: I want to give full consideration, but I 5 also don't want to complicate this thing beyond all reason. 6 Here is what I have in mind. Let us assume, and I 7 believe the record before me supports this, but I will just 8 assume it for the moment, let us assume that the bonds we are 9 talking about, which the parties have referred to conveniently 10 as Argentine law bonds, let us assume that -- it's not an 11 assumption. They were not issued. Let us assume, in case 12 there is any possible question, let us assume that they were 13 not issued in 1994, as were the bonds that are subject to my 14 injunction. Let us assume that they are payable in Argentina. 15 Let us assume that they are subject to Argentine law. 16 Now, there are certain issues, not an indefinite vast 17 universe of issues, but there are certain issues which flow 18 from that. The prime issue is, despite the description I've 19 given, are they subject in any way to the fiscal agency 20 agreement of 1994. That issue has been raised by the parties 21 and it is an issue, a real issue. But the issue is not 22 indefinite in the things that bear upon it. It is a finite 23 issue. 24 Again, the issue is whether in some way those bonds, 25 as I've described them, are subject to the 1994 fiscal agency SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

34 E9QMREPC 1 agreement pertaining to the 1994 bonds. And as I understand 2 it, the precise issue is whether a payment of interest on those 3 bonds would invoke the pari passu provision of the 1994 fiscal 4 agency agreement. Judging from the briefing before me and the 5 argument before me, that is the issue now. How is it to be 6 dealt with. 7 MR. FRIEDMAN: Shall I answer that, your Honor? 8 THE COURT: Let me just finish. 9 MR. FRIEDMAN: I'm sorry. I apologize. 10 THE COURT: Of course I'll get back to you. 11 Judging by what has been referred to by Mr. Olsen and 12 by you and in the briefs, to resolve that issue you look to the 13 1994 fiscal agency agreement because if this is external 14 indebtedness of the Republic within the meaning of certain 15 parts of the FAA, then there can be no payment without paying 16 under the pari passu clause. If that is the case, the question 17 is, is that the case? That's the issue. And for that we don't 18 look to 100 sources of information and vast amounts of 19 discovery. We look to a provision which defines domestic 20 foreign currency indebtedness, and we look to what I think was 21 discussed with Mr. Olsen and with you, the provision little 22 iii, which has this language offered exclusively within the 23 Republic of Argentina. 24 We were there, I think, with Mr. Olsen and with you 25 and that's where we ought to be, dealing with the SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

35 E9QMREPC 1 interpretation of those provisions, because under the clear 2 language of the FAA, if this is external indebtedness and you 3 go no farther, then there can be no payment without taking care 4 of the pari passu. If it is not so, then there can be a 5 payment without dealing with the pari passu. And that's where 6 the issues come. It's the interpretation of those provisions. 7 Do you have anything to add to that subject? 8 MR. FRIEDMAN: Yes, I do, your Honor. 9 THE COURT: The reason I went through all of that is 10 that I ask the lawyers to be very careful when you are dealing 11 with bonds which are really bonds issued in 1994 or exchanges 12 for those bonds. Please keep that clear. They are what they 13 are. They are not something else. Go ahead. 14 MR. FRIEDMAN: With respect to your Honor's question 15 concerning whether these Argentine law bonds are external 16 indebtedness or whether they fall within the carve-out for 17 domestic foreign currency indebtedness, your Honor has focused 18 our attention on item 3 little i, which indicates that domestic 19 foreign currency indebtedness would include indebtedness that 20 was -- I'm sorry, print is a little small -- indebtedness. 21 THE COURT: Offered exclusively within the Republic of 22 Argentina. 23 MR. FRIEDMAN: Offered exclusively within the Republic 24 of Argentina. 25 THE COURT: That's the crucial language. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

36 E9QMREPC 1 MR. FRIEDMAN: What I would say as to that, your 2 Honor, is, first, when we look at the documentary record, the 3 documentary record does not indicate that the bonds were 4 offered exclusively in Argentina. 5 THE COURT: What do you mean by documentary record? 6 MR. FRIEDMAN: When I say documentary record, I mean 7 the documents that have been put before the Court with the 8 parties' submissions in connection with this motion. And the 9 documentary record, as an example, includes the prospectus that 10 I mentioned. And if you look at that prospectus, the 11 conclusion one would draw is that these bonds were not offered 12 exclusively within Argentina. 13 Now, I know Citibank and Argentina make the argument 14 that the bonds were offered exclusively in Argentina. That, I 15 would say, is an untested assertion of fact. Were these bonds 16 offered exclusively in Argentina. We see Citibank and 17 Argentina arguing they were. To the extent the Court -- 18 THE COURT: Let me interrupt you. I think that taking 19 Mr. Olsen's argument and your argument and the discussion we 20 have all had, we really are now at the issue. And it is the 21 issue of whether these bonds were offered exclusively within 22 the Republic of Argentina. That is a factual issue. And what 23 has been submitted to me by Ms. Wagner and I believe Cleary 24 Gottlieb is what they consider evidence that these were. 25 But if there is a factual issue, then what do you do SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

37 E9QMREPC 1 about factual issues. You figure out a way to resolve them. 2 And what I would like to hear from you is why you believe there 3 are factual issues. Because I thought from the record before 4 me there were not. Why do you believe there are factual 5 issues? 6 MR. FRIEDMAN: The reason why I believe there are 7 factual issues, your Honor, is that the question of whether 8 bonds were offered exclusively in Argentina will depend on the 9 factual issue of whether the bonds were, in fact, offered 10 exclusively in Argentina. If the bonds were, in fact, offered 11 in other places, then, obviously, they were not offered 12 exclusively in Argentina. So the factual issue is, what is the 13 evidence, what is the historical record about how and where 14 these bonds were offered. 15 THE COURT: I don't understand why you are talking 16 about a historical record. I believe these are not bonds that 17 date back to the War of 1812 or something like that. I think 18 they are a pretty recent creation. Are they not? 19 MR. FRIEDMAN: Your Honor, the bonds in question were 20 offered in the 2005 and 2010 exchanges. 21 THE COURT: You are right. I had forgotten. 2005 and 22 maybe a little later. But, please, I have to tell you right 23 now, I do not believe there is any merit in saying to the idea 24 that those bonds were part of the exchange of 2005 and 2010 25 which had to do exclusively with the 1994 bonds. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

38 E9QMREPC 1 MR. FRIEDMAN: Your Honor, may I just say one thing? 2 THE COURT: Yes. 3 MR. FRIEDMAN: In the argument before your Honor on 4 July 22, counsel for Citibank conceded and acknowledged that 5 these Argentine law dollar denominated bonds were, in fact, 6 offered in the 2005 and 2010 exchanges and that these dollar 7 denominated bonds were thus within the definition of exchange 8 bonds in your Honor's injunction. There is no doubt that 9 these -- 10 THE COURT: Can I interrupt you. I was the author of 11 the injunction and I had no such intention. 12 MR. FRIEDMAN: I understand your Honor has said that. 13 THE COURT: I don't mean to be so brusque with you. 14 MR. FRIEDMAN: Shall I continue? 15 THE COURT: What I'm trying to do at this hearing, and 16 I tried to do it the other day, I realize that some confusion 17 has come into the record and some of it undoubtedly has been by 18 my usage of words and so forth. I want to get rid of that 19 confusion and go from here on, from beginning here at least on 20 an unconfused record, and I want to say to you that it is clear 21 to me that there are certain bonds that were involved in the 22 1994 offering. There were certain bonds that were produced as 23 a result of the exchange related to that bond issue, and then 24 there are other bonds. Please do not confuse them. 25 MR. FRIEDMAN: May I continue, your Honor? SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

39 E9QMREPC 1 THE COURT: Yes. 2 MR. FRIEDMAN: What I would submit is that we are 3 dealing with important legal and factual issues. One example 4 of a legal issue that I believe your Honor will want to 5 consider is what your Honor has just stated as to your Honor's 6 intent at the time the injunction was issued and how that 7 intent relates to the words of the injunction. And we have the 8 factual issue that I've mentioned concerning whether the 9 offering of these Argentine law bonds was exclusively in 10 Argentina. 11 And what I would respectfully submit is that because 12 plaintiffs have voluntarily agreed to a stay that would enable 13 Citibank to make the September 30 payment, there is no 14 emergency and no urgency before your Honor. And there are 15 important issues that I cannot emphasize how important they are 16 to the meaning and ongoing enforcement of the injunction. And 17 it's because these issues are so important that the plaintiffs 18 have said, we will acquiesce and not object and allow the Court 19 to enter an order permitting the September 30 payment, and then 20 we know the parties will have time to develop the record and 21 present to the Court whatever is appropriate, and the Court 22 will not be under time pressure to decide these issues. And I 23 would respectfully ask that your Honor allow the parties to do 24 that. Because we have agreed to the stay, because we have 25 submitted an order that would enable your Honor to memorialize SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

40 E9QMREPC 1 that, there is no urgency. And these are very important 2 issues. 3 I would just, if I may, as just one example of some of 4 the legal issues, when Citibank contended in the Second Circuit 5 that your Honor's July 28 order should be reversed, Judge 6 Parker said that he does not even know how Citibank could 7 seriously argue that the Argentine bonds aren't covered by the 8 injunction. I just mention that, your Honor, as one example. 9 THE COURT: The Second Circuit, including Judge 10 Parker, did not come down with a ruling. It doesn't help me a 11 lot to hear about colloquy. 12 MR. FRIEDMAN: Your Honor, if I may, yes and no. The 13 Second Circuit last week did come down with a ruling in that 14 the Second Circuit dismissed the appeal because -- this is in 15 their order -- because your Honor's July 28 order clarifying 16 that the injunction applies to the Argentine law bonds was, in 17 the view of the Second Circuit, in their order -- 18 THE COURT: You are going beyond their language. 19 MR. FRIEDMAN: If I may, your Honor, the Second 20 Circuit said the July 28 order was a clarification and not a 21 modification of the injunction. That was their language. 22 I appreciate your Honor wants to focus on certain 23 issues. Of course, I respect that. I'm really trying to make 24 the point that there are important issues and there is no 25 emergency because the plaintiffs have agreed to the stay that SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

41 E9QMREPC 1 Citibank wants and, therefore, we are requesting that your 2 Honor allow the parties an opportunity to develop the record so 3 that the Court can make a decision without this emergency 4 hanging over everybody's heads. It's because of the importance 5 of this and the urgent desire on the part of the plaintiffs to 6 allow the record to be developed, the Court to consider all the 7 issues, that we have proposed and are prepared to agree to the 8 stay. That's our request, your Honor. 9 THE COURT: It's a fair request. What do the other 10 parties say to that? 11 MS. WAGNER: Your Honor, may I be heard for another 12 minute? 13 THE COURT: Please. 14 MS. WAGNER: Your Honor, of course, we agree that 15 complicated issues should not be decided under emergent 16 conditions. I would suggest that what you have heard today is 17 that plaintiffs agree that they did not make a record before 18 you in connection with the injunction, and I think your Honor 19 agrees as well that the injunction applies to the Argentine law 20 bonds. 21 Given that, the plaintiffs are entirely welcome to 22 make that record if they want. But it is not appropriate right 23 now to apply that injunction to Citibank and to the Argentine 24 law bonds. 25 So what I would suggest to the Court is this. I SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

42 E9QMREPC 1 believe that we can show you, I believe your Honor's focus on 2 the fiscal agency -- 3 THE COURT: I did not know anybody was suggesting that 4 my injunction of February 23 applied to these new bonds. I 5 didn't know anybody was suggesting that. 6 MS. WAGNER: I believe that is the suggestion, your 7 Honor, and I would respectfully submit that what we need to do 8 here is leave the injunction where it is, agree that it does 9 not apply to the Citibank and the Argentine law bonds. 10 Plaintiffs then can make a motion to have a new injunction. 11 They can explain why the Argentine law bonds should be subject 12 to the pari passu clause if they can. We believe they cannot 13 make that showing because we believe you could not get an 14 Argentine law bond by tendering a bond that was issued under 15 the fiscal agency agreement. So we don't think they can make 16 that showing. 17 Our suggestion would be, your Honor, to vacate the 18 restriction on Citibank and the Argentine law bonds that they 19 insist you intended in July of 2014, to reinstate the 20 clarification order that says the original injunction does not 21 apply. Then we can all go and have discovery and they can make 22 a motion and they can explain to the Court why it is they think 23 an injunction should apply to Argentine law bonds and to a 24 custodian such as Citibank, who is not in any way connected to 25 any relevant contract. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

43 E9QMREPC 1 So my suggestion, your Honor, is that I adopt the 2 suggestion that we should take the pressure off and we should 3 have discovery and plaintiffs should do whatever they wish to 4 do. But they are not entitled to have an injunction hanging 5 over Citibank's head when they acknowledge themselves they 6 cannot prove that the bonds that we hold are subject to the 7 pari passu clause. That would be my suggestion, your Honor. 8 MR. FRIEDMAN: Your Honor, may I be heard briefly? 9 THE COURT: Sure. 10 MR. FRIEDMAN: We absolutely do not acknowledge what 11 Ms. Wagner says we acknowledge. We believe, so the record is 12 clear, that your Honor's original injunction, as your Honor has 13 ruled on July 28, as the Second Circuit judges have said, as 14 the plain terms of that injunction state, we believe it applies 15 to the Argentine law bonds. And I appreciate Ms. Wagner 16 disagrees, I appreciate that your Honor has stated that the 17 Court had in mind a different intention at the time in 2012. 18 But these are important issues. And the way to deal with 19 important issues is not to start by vacating the injunction or 20 modifying the injunction or changing the injunction in any way. 21 There are orders in place now and the whole point of our 22 agreeing to a stay is to ensure that Citibank is in no way 23 prejudiced, that Citibank is able to process the payment that 24 it says it wants to make. And what that means is that the 25 issue does not become live or urgent again, your Honor, until SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

44 E9QMREPC 1 December. 2 And the whole point of the stay is to enable the Court 3 and the parties to consider these issues without being in court 4 on the second day of Rosh Hashanah, on a Friday afternoon, 5 after a few days of briefing without the Court and the parties 6 having the time to devote what is appropriate and, I would 7 submit, necessary for the consideration of this important issue 8 when there is no emergency and no time pressure in fact. 9 THE COURT: Anyone else wish to be heard? 10 MR. OLSON: May I, your Honor? 11 THE COURT: Sure. 12 MR. OLSON: Thank you, your Honor. I'll be very, very 13 brief. 14 I think that you put and expressed precisely what the 15 issue is. The pari passu clause required that the payment 16 obligations of the Republic, under the securities pursuant to 17 the fiscal agency agreement of 1994, be treated equally with 18 all present and future unsecured and an unsubordinated external 19 indebtedness. That is what your injunction covered, external 20 indebtedness with respect to that pari passu provision of the 21 fiscal agency agreement of 1994. The term external 22 indebtedness is explained in the fiscal agency agreement, and 23 you are correct, in our submission, that if these bonds are the 24 type of bonds that are exempted under the provisions that we 25 have been talking about here today, that is to say, offered SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

45 E9QMREPC 1 exclusively within Argentina, then they may not be covered by 2 your injunction. They wouldn't be covered by the pari passu 3 clause, the equal treatment provision. We addressed precisely 4 this point on the brief that we submitted to you on pages 16, 5 17, and so forth, the brief with respect to, we demonstrate 6 that these bonds were not offered exclusively within Argentina, 7 and we provide evidence to that. 8 However, the record is not complete because we were 9 not permitted to conduct discovery with respect to that very 10 issue. And so, as Mr. Friedman points out, the stay takes care 11 of Citibank into the future. We have time to fully brief 12 properly with appropriate discovery the factual issue that you 13 put your finger on. There is no reason to do it any other way. 14 Because it is important to all the parties that are involved in 15 this long dispute. And the issues are serious and very, very 16 important. And that is a proper appropriate judicious way to 17 handle this issue. 18 THE COURT: Anyone else? 19 MR. VASSOS: John Vassos from Morgan Lewis & Bockius 20 on behalf of Clear Stream. 21 We have not seen the proposed order regarding the 22 stay. Clear Stream, like Euroclear, JP Morgan Chase, one of 23 the downstream parties, we would just ask that it be clear that 24 to the extent Citibank can pass the money on to us, that we be 25 allowed to pass the money on to our customers in kind. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

46 E9QMREPC 1 MR. FRIEDMAN: Your Honor, I can respond to that, if I 2 may. 3 THE COURT: Please. 4 MR. FRIEDMAN: The proposed order does specifically 5 provide and permit that the downstream recipients from 6 Citibank, such as Euroclear and Clear Stream, can process the 7 payment. We don't specifically refer to Euroclear and Clear 8 Stream, because we explicitly refer -- 9 THE COURT: Where is the proposed order? 10 MR. FRIEDMAN: May I hand it up, your Honor? 11 THE COURT: Yes. 12 MR. FRIEDMAN: It's just one paragraph. 13 THE COURT: Did I interrupt you? 14 MR. VASSOS: Your Honor, no. I just stated my 15 question. Mr. Friedman has answered it frankly to my 16 satisfaction. I'm comfortable with his representation on the 17 record. I don't need to waste the Court's time and read the 18 order. I think the issue is probably clear, assuming the order 19 he has put before your Honor you will sign. 20 THE COURT: Ms. Wagner. 21 MS. WAGNER: Thank you, your Honor. 22 Your Honor, just to state it again, I don't think it's 23 appropriate to keep an injunction on Citibank when the parties, 24 the plaintiffs who moved for the injunction agree that they 25 need discovery about it. So I would respectfully ask you to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

47 E9QMREPC 1 vacate the Citibank injunction and reinstate the order that 2 says your earlier injunction does not apply to us, and then the 3 plaintiffs can move to get an injunction that will apply to us. 4 And if your Honor is otherwise inclined to just issue 5 a stay, then I would respectfully request a stay that would 6 cover the period of time during which any appeal would be taken 7 from your Honor's ruling on the merits. But I would 8 respectfully say that they have not made a case for keeping the 9 injunction on Citibank. And there is no reason to keep it on 10 Citibank and, therefore, it should be vacated and they should 11 be put to the proof of explaining why the injunction should be 12 applied either to Citibank or to the Argentine law bonds, and 13 those I would submit to you are different questions. Thank 14 you, your Honor. 15 MR. LEVI: Howard Levi nor nonparty JP Morgan Chase. 16 Just the same concern expressed by Mr. Vassos for 17 Clear Stream, namely, whether there is a vacatur or there is a 18 stay, whatever occurs, we just want the order issued by the 19 Court clear that the downstream parties from Citibank and the 20 payment chain are free to receive and pay the payment that they 21 get. I think that plaintiff's counsel has submitted an order 22 where he says it provides for that. We just want to make clear 23 whether it's plaintiff's order that's adopted or the order that 24 Citibank has asked for. In either event, it's clear that the 25 downstream parties are taken care of in that manner. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

48 E9QMREPC 1 THE COURT: Thank you very much. 2 I think Ms. Wagner has a pretty important point and 3 that is this. If there is to be an injunction against 4 Citibank, then there has to be a proper record supporting such 5 an injunction, and the Court has to clearly issue that 6 injunction. 7 Let me say this. The order that I entered in the 8 summer was intended to be simply a temporary way to hold things 9 in place. But as far as an injunction is concerned, there is 10 one injunction and that is the September 23. That is the only 11 injunction in place that applies, as I've said numerous times 12 this afternoon, only to the 1994 bonds and the bonds that were 13 issued in exchange for those bonds in 2005, 2010. That's what 14 that injunction applies to. 15 Now, what happened this summer was not a motion by 16 anybody to enjoin Citibank, and certainly Citibank was not 17 enjoined by the original injunction. But there was no motion 18 to enjoin Citibank this summer. There was a request to see 19 what the Court would say about whether a certain payment being 20 proposed would violate the injunction, and I allowed the 21 payment. I followed it up with an order that it be a one-time 22 thing and we would come back. But none of that involves the 23 issuance of an injunction against Citibank. 24 There has been a reference this afternoon to all the 25 important issues. Well, that's very interesting and I don't SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

49 E9QMREPC 1 mean to take that lightly. But it's not clear to me how all 2 those important issues arise. Issues generally don't arise 3 unless there is a motion or some kind of an application to the 4 Court, other kind of an application. 5 Let's take a short break and we will try to conclude 6 promptly after that. We will take a short break. 7 (Recess) 8 THE COURT: I'd like to know, go through the parties 9 here know who consents to and who would object to the proposed 10 order submitted by the plaintiffs. Obviously, the plaintiffs 11 submitted it, so you agree with it. 12 MR. OLSON: Yes, your Honor. 13 THE COURT: Let's go to other parties. 14 Ms. Wagner, do you agree to it or not or object to it? 15 MS. WAGNER: I object to it, your Honor. 16 THE COURT: Let's see who else. Does the Republic 17 want to say whether they agree or object? 18 MR. BOCCUZZI: Carmine Boccuzzi from Cleary Gottlieb. 19 The Republic agrees with the position stated by 20 Citibank. 21 THE COURT: Do you agree with this proposed -- 22 MR. BOCCUZZI: We object to plaintiffs and we think 23 that what Citibank, Ms. Wagner presented, was the better way of 24 proceeding. 25 THE COURT: I didn't understand. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

50 E9QMREPC 1 MS. WAGNER: Just to be clear, your Honor, that's what 2 I meant is, there should be no injunction and, therefore, no 3 need for a stay. 4 MR. VASSOS: Your Honor, we take no position as to the 5 issue that Ms. Wagner raises. To the extent that the Court 6 decides to sign this order, the question is, are we okay with 7 it. We would be okay with the order. Again, we take no 8 position on whether the order should be signed or if 9 Ms. Wagner's request should be granted. 10 THE COURT: Anybody else want to state whether you 11 consent or object? 12 MR. LEVI: Your Honor. 13 THE COURT: I'm talking about the proposed plaintiff's 14 order. 15 MR. LEVI: We likewise do not take a position on the 16 order. To the extent your Honor is going to enter it, it 17 contains language regarding downstream recipients that is 18 acceptable to us. 19 THE COURT: It what? 20 MR. LEVI: It contains language regarding downstream 21 recipients and clear stream ask be addressed, and we see it's 22 addressed in this order. We otherwise don't take a position on 23 whether this particular order should be entered or not. 24 THE COURT: I'm not clear what you are saying about 25 the downstream situation. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

51 E9QMREPC 1 MR. LEVI: In other words, if Citi is free to make the 2 payment, then the payment flows to downstream recipients in the 3 payment chain. 4 THE COURT: Right. 5 MR. LEVI: My client, which is a nonparty, JP Morgan 6 Chase Bank, maintains accounts that it expects will receive 7 monies downstream from the Citi payment. And so we just want 8 whatever order is issued by the Court, for it to be clear that 9 the various downstream recipients, Clear Stream, JP Morgan, 10 others, are free, also, to receive and to pay over these 11 monies. 12 THE COURT: Isn't this language sufficient if I sign 13 it: Further allow Citibank's downstream recipients to receive 14 and process their respective portions of such payment. Isn't 15 that clear enough? 16 MR. LEVI: It is. That language is acceptable. 17 THE COURT: Anyone else want to object or consent to 18 this? 19 I will sign the order proposed by the plaintiffs and I 20 am going to read it. It will take a minute. But the record 21 ought to be clear and people who are here ought to hear this. 22 At the request of the plaintiffs, in order to allow 23 the parties and nonparty Citibank the time necessary to present 24 a sufficient record and legal argument to resolve the issues 25 presented by Citibank's September 23, 2014 motion by order to SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

52 E9QMREPC 1 show cause to vacate the Court's July 28, 2014 order or to 2 modify the injunction contained in that order, or for a stay of 3 that order, the Court will defer the hearing on the motion 4 scheduled for September 26, 2014 and enlarge the briefing 5 schedule to dates to be set and will allow Citibank to process 6 the September 30, 2014 interest payment, approximately $5 7 million, that it receives on the U.S. dollar denominated 8 Argentine law bonds, ISIN, then ARARGEO3EO97, and ARARGEO3G704, 9 and will further allow Citibank's downstream recipients to 10 receive and process their respective portions of such payment. 11 The Court will now sign that order. 12 Now, the further processes must proceed very promptly. 13 Whatever discovery is to be taken, whatever inquiry or 14 investigation, the Court sets 30 days as a time within which 15 that has to be done. That is tight, but we do not want to be 16 back here over and over when interest payments are due. This 17 phase of the litigation must be concluded promptly. Obviously, 18 when the discovery is concluded within 30 days, there will be, 19 as contemplated by this order, briefing and there will be a 20 hearing on the ongoing permanent situation about Citibank. 21 That concludes the proceedings for today. Thank you. 22 MS. WAGNER: Your Honor, may I be heard for a minute? 23 THE COURT: Ms. Wagner, I didn't hear you. 24 MS. WAGNER: Your Honor, if I may just ask a 25 clarifying question, if I may use that term. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

53 E9QMREPC 1 I believe that your Honor had indicated before on the 2 record that the injunction of February 23 does not apply to 3 Citibank at the moment and that your Honor's intention was that 4 plaintiffs would make a motion to address how they intend to 5 make an application for an injunction that would apply to 6 Citibank and the Argentine law bonds. I just want to make sure 7 that my understanding of that is correct. 8 THE COURT: Say that again. I'm not clear what you 9 are saying. 10 MS. WAGNER: I had understood your Honor to say a 11 short time ago that the major injunction of February 23 does 12 not apply to Citibank's payments on Argentine law bonds, and 13 that it would be appropriate for plaintiffs to make a motion to 14 indicate how they intend to support a claim that an injunction 15 should be applied to Citibank. I just wanted to understand 16 whether it is the case, as I understand, that the major 17 injunction does not apply to payments by Citibank Argentina on 18 the Argentine law bonds. 19 MR. FRIEDMAN: May I respond to that, your Honor? 20 THE COURT: Sure. 21 MR. FRIEDMAN: I think the Court has been clear that 22 there is a stay in effect that will allow the parties time to 23 present the legal arguments and the factual arguments and 24 develop the record, and the Court made very clear that it's not 25 making rulings today about the scope of the injunction. That SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300

54 E9QMREPC 1 was the whole point of the order that your Honor signed. And I 2 believe the question from Citibank's counsel is out of order 3 after your Honor issued an order and closed the proceedings. 4 THE COURT: She is not out of order. 5 MR. OLSON: I was simply going to say something very 6 much along the same line; that is, what was just requested 7 seems squarely inconsistent with the order that you just issued 8 to allow the parties to conduct discovery and brief these 9 issues and have a hearing to resolve this very question. 10 THE COURT: That's exactly right. 11 Let me say this. At a session like this I do not sit 12 here mum and I have a give and take with the lawyers. But as 13 far as a ruling, as far as a ruling, I have not made a ruling 14 today and will not make a ruling until the record is complete 15 and the briefing is finished and that is not today. 16 We are adjourned. Thank you. 17 o0o 18 19 20 21 22 23 24 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300